A married homemaker who was devoted to raising her two children, Mary created a sanctuary for her family in their Downey, California, home. Once the kids were older and more independent, Mary entered the working world as a school aide to help Spanish-speaking children learn English. She eventually moved on to become elected to the local school board.
"Her terms on the school board were a real source of pride for my family. Through her example, my mom showed us that anything can be achieved with hard work and determination. It was really something else," said Robert.
As Mary began to age, she was more adamant about aging in place in the family home. But achieving that would require some out-of-the-box thinking on Robert's part.
Robert continued, "As Mom got older, we brought in-home caregivers to assist her with her mobility and hearing issues. And let me tell you, in-home care is very expensive. We had already gone through some of my savings, some of my mom's savings and her investments, and we were committed to continue this care at home. And then one day I saw a reverse mortgage commercial on television, and we decided to look into it more as an option. We wanted to work with a lender that would take care of us."
According to the "Cost of Care Survey," an annual report by Genworth, in-home care costs less than adult day care, skilled nursing services and assisted living. In fact, in-home care averages about $45,760 per year nationally, while a private room in a skilled nursing home costs $92,378 per year, on average. In addition, over the past five years, the costs for assisted living and skilled nursing have risen by four percent.
While the costs of long-term care can be staggering, older Americans may be apprehensive about using a reverse mortgage loan as a means to pay for these costs. But Hopkins believes more seniors should give reverse mortgages a second look.
"There have been a lot of changes in the reverse mortgage world. There are more consumer protections. There is a financial assessment now to qualify for a reverse mortgage. The rates and fees have really come down with reverse mortgages over time, so you have a very competitive borrowing rate and fees involved with this," explains Hopkins.
This is good news for the almost 80 million baby boomers likely to retire through 2030 (Pew Research Center). According to recent data from the National Reverse Mortgage Lenders Association (NRMLA), older Americans now hold nearly $6 trillion in untapped home equity -- more than most other assets they've saved. With Social Security, workplace retirement plans and personal savings not always being enough to live comfortably, baby boomers will likely need to start considering reverse mortgages as they near retirement.
Many financial experts recommend using what's called a "reverse mortgage growing line of credit," which can be used as a standby source of funds to use when emergencies, including health-related challenges, arise. A reverse mortgage line of credit can also help older Americans avoid tapping other investments and assets when unexpected expenditures come up.
Whether homeowners decide to receive their proceeds in the form of a lump sum, in monthly payments, as a line of credit, or a combination of these is entirely up to them. As part of the loan application process, prospective borrowers are required to attend financial counseling from a third-party and are encouraged to consult with their family and trusted advisers to ensure they work with a reputable lender that can ensure their assets are protected.
In the case of Robert's mother and their family, the choice was easy to make. Robert's mother died last year, but Robert and his family are grateful for their decision to take out a reverse mortgage loan on the family home.
"My mom didn't require care until she was 85 and lived out her days in her home until she passed away at age 92. My sister and I realized how much the reverse mortgage helped us give Mom her wish of staying in her home until she passed," continued Robert. "We believe she lived longer by being able to stay in her home and receive the round-the-clock care she needed. For us, the reverse mortgage was a real blessing."